Monthly Archives: May 2014

What Is The Optimum Quantity of Money In An Economy?

The correct answer is “any amount will do” as long as the money is divisible. A short example might help explain this very straight forward fact. Let’s say you and your best friend decide to play Monopoly. As you open the box you discover to your horror that all the money is missing. As it’s impossible to play the game without it, the both of you agree to create money out of pieces of paper in just one denomination, each representing 1 MM (Monopoly Money). How many MMs do you need to…